Jeff Horwich: Barclays Bank, based in London, is paying $450 million to settle securities investigations in the U.S. and the U.K. Regulators accused the bank of manipulating a critical interest rate -- the so-called "Libor" rate -- to its own advantage.

It's important... but it all gets a little messy -- so in times like these we bring in our explainer-in-residence, Marketplace Money senior producer Paddy Hirsch. Hey, Paddy.

Paddy Hirsch: How ya doin'?

Horwich: I'm doing well, thanks. What's the essence of today's news?

Hirsch: Well the essence is that we have this key benchmark, right -- which is the London Interbank Offering Rate -- that has been manipulated by Barclays and may have been manipulated by a bunch of other banks. And that's a big deal because that's the rate at which a number of other consumer loans are often based off.

Horwich: This word Libor -- most of us know nothing about it. What is it and what was the bank doing with it?

Hirsch: OK, so Libor, first of all, it's this London Interbank Offering Rate, which basically means its the rate at which banks lend to each other. And it's set every day for the dollar -- it's like 18 banks in London, they all sit around... they're not just British banks, by the way, there are American banks and Japanese banks and German banks and all the rest of it. And they all sit around, and they work out how much it's costing them to borrow from each other. Then they come up with an average and that's the number that they put out into the world.

Horwich: And what did Barclays stand accused of manipulating here?

Hirsch: They stood accused of manipulating their input into that calculation. So, these 18 banks -- Barclays was one of them. It was accused of making up that number. So essentially what would happen is, rather than one person citing what that number was from Barclays, what it was doing was taking recommendations from traders in the banks. So a trader would say: hey, why don't you just lower the rate a little bit so it makes us look a little bit better. They were accused of doing that and were in fact found to have done so.

Horwich: What are the implications? What do we learn here, for American consumers and investors?

Hirsch: I think the first thing is, these things like Libor are much more important than you think they are; they do sound like they're from another planet but they're actually really key to our existence because it governs how much we pay for cars and houses and all the rest of it. The second takeaway is that banks basically cannot be trusted on their own. I mean, they've got to be really carefully monitored and regulated -- otherwise they can kind of run off and do whatever they fancy.

Horwich: Keep your hands off my Libor. Paddy Hirsch does a lot of useful explaining as part of our online explainer series the Whiteboard. Paddy, thanks for stopping by.